Annuity Pension

T

tzipi

Guest
My father of 66 is going to sell some land next year. He currently receives the state pension. He has not contributed to a pension plan during his working years. Would it be possible to use the money from the land sale to purchase an annuity pension and receive a monthly income from this ??
 
Hi there he could buy an annuity income but there would be no tax advantage to doing so - it would just be a guaranteed income for life, a capital gain like that is not 'pensionable income'.
 
Your father should really get independent professional advice on how best to maximise his retirement means in this situation. There could be options for some (legitimate) financial engineering to mitigate tax liabilities.
 
Your father could buy what is referred to as a purchased life annuity, this is an annuity bougth from a life company that only a element is taxed as income and the remainder is seen as a repayment of capital.

However annuities are generally not considered very good value for money and typically die with the annuity purchaser unless provision is amde when buying the annuity for a spouse or financial dependant, such a provision costs and reduces the annuity payable.

Depending on the level of money in question, independent financial may be worth considering.
 
He has missed out on the whole tax free benefit of building a pension pot so why get involved in the annuity? The rates are poor now so he'd be as well off investing for income (at least you would be better off as the money will be left to his estate rather than to the annuity provider when he dies)
 
You must log in or register to reply here.
Back
Top